In a preview of his session at next month’s Managing Risk and Litigation conference, Clyde & Co partner & co-chair of the global arbitration group Peter Hirst talks to The Lawyer about the future of international arbitration and the relationship between arbitration and third party funding.
What changes are on the horizon when it comes to international arbitration?
It is an interesting time to work in international arbitration. While the popularity of arbitration continues, there is scope for development in certain sectors such as finance where court litigation remains the standard.
This is not to say that arbitration is going to take over as the primary dispute resolution mechanism in this field, more that there is still work to do for contracting parties to understand the benefits of arbitration and to think in a more bespoke way about their dispute resolution agreements.
Third party funding has been a part of arbitration for some time, but with recent legislative changes in Asia and encouraged by the ICCA draft guidelines released in September 2017, a more serious debate is taking place globally about the relationship between arbitration and third party funding. Having sat as a panellist in a recent debate on the ICCA-QMUL draft report, I am conscious that significant academic and practical questions remain around the relationship between funding and arbitration, including the relationship between funding and insurance.
I believe that the debate will continue for some time, even after the final report is published next year. That said, funding is here to stay and it has the potential to enable the disputes market to grow as claims are brought which could otherwise not be pursued or businesses see opportunities for risk-sharing which affects their appetite for disputes.
Within the arbitral community there is a desire to ‘widen the pool’ and several initiatives are bearing fruit to enable new arbitrators to come to the fore. For arbitrating parties these changes will be subtle but important in increasing the diversity and availability of high-quality tribunals.
Are arbitral institutions leading the way in developing international arbitration?
There is a healthy debate at the moment around procedural robustness from tribunals which is in line with moves by institutions to provide for summary disposal procedures (or in the case of the ICC to confirm the tribunal’s powers in this regard).
Institutions have listened to their users and recognised that sometimes tribunals are reluctant to make robust decisions for fear of challenge and the institutions have therefore acted to ensure tribunals have the powers they need to actively and effectively manage cases.
Good case management from tribunals in the interests of reduced costs and increased efficiency will improve arbitration’s image as a real alternative to litigation.
Is the uncertainty surrounding Brexit impacting London’s position as a leading international arbitration centre? Will Brexit affect litigation in the English courts?
It would be naïve to think that the UK’s ‘Leave’ vote in June 2016 went unnoticed by the rest of the world. I do however think that now some of the dust has settled, and people have had the opportunity to think through the potential consequences of Brexit, London’s position as a leading arbitral centre will emerge unscathed.
We all know that London’s arbitration prowess is not dependent on its political position in Europe in any way. Indeed, post the UK’s European divorce, it may well be that London reaps benefits as an arbitral centre close to, but not part of, the EU. Similarly, a return to the ‘pre-West Tankers’ position on anti-suit injunctions may well be in the interests of London-seated arbitrating parties.
While a London-seated arbitral award benefits from the protections of the New York Convention for the purposes of enforcement, this is perhaps an area where the English courts face a greater level of Brexit uncertainty. At present, reciprocal enforcement regimes exist within Europe and it is currently unclear what the post-Brexit position will be. Having said that, the reasons for reciprocal enforcement of English judgments in other jurisdictions will remain valid and there is no reason to think that reciprocal agreements will not be put in place.
I also believe that English law and the neutrality and reliability of the English courts will continue to attract business from across the world. In reality, while Brexit is a significant moment for the UK, I do not think that in reality it will have a long-term impact on international dispute resolution here.
If you hadn’t become a lawyer, what do you think you might have done instead?
Most probably an engineer! When I left school I had no idea what I wanted to do. I was fortunate enough to work in many different environments from pubs to insurance offices and for an engineering contractor. In the latter, the company was employed by the newly established Canary Wharf developers.
I was part of a team that was hired to clean up after the contractors, or ‘snagging’ as it is known. I would spend every day sorting out problems and finding solutions from blocked drains to design and engineering issues. We were our own bosses and we had to use our initiative to identify where the contractors had failed to complete tasks, why the services weren’t working and find solutions.
The opportunities for small businesses were enormous – no surprise the company is now owned by Centrica. If only I had remained and moved into the management…
Peter Hirst is one of the 30+ speakers at this year’s Managing Risk and Litigation conference taking place in London on the 5th December. For more information on the conference, a copy of the agenda, or to enquire about tickets to attend, please contact Bruce Allmand-Smith on +44(0) 20 7970 4625 or Bruce.Allmand-Smith@centaurmedia.com.